Commissioner of Income Tax vs Ashoka Builders (P) Ltd.

In this appeal u/s 260A of the IT Act, 1961 (''Act'') the Revenue is aggrieved by an order dt. 28th Feb., 2007 passed by the Income Tax Appellate Tribunal (Tribunal), Delhi Bench "D", New Delhi in ITA No. 4787/Del/2004 relevant for the asst. yr. 1996-97.

The assessed was originally assessed u/s 143(3) of the Act on 31st March, 1999 on a total income of Rs. 5,08,381. Thereafter, on 11th March, 2003 the assessment was sought to be reopened by issuance of a notice u/s 148 of the Act. The reasons for reopening the assessment have been indicated in the order of the Tribunal and they are as follows:

The assessment in this case was completed on 31st March, 1999 at an income of Rs. 5,08,381. On examination of assessment order, it has been found that the assessed has set off loss from the transaction of shares to the tune of Rs. 15,73,020 from the business income. At no stage, the assessed has stated that dealing in shares is his main business. Hence, loss in share dealing should have been treated as speculative loss which cannot be set off against business income as per Explanation to Section 73 of the Act. In this case, the returned income of the assessed was accepted by the AO and the speculative loss was allowed to be set off against the business income of the assessed. I have, Therefore, reason to believe that income to the even (sic-extent) of Rs. 15,07,070 has escaped assessment for the asst. yr. 1996-97.

According to the assessed the entire material had been disclosed to the AO who had even asked for details relating to purchase and sale of shares. This information was supplied to the AO in writing. According to the assessed since the entire material had been disclosed, the AO has done nothing more than change his opinion for issuing a notice u/s 148 of the Act for reopening the assessment. Since the notice was issued after the expiry of the period of four years from the end of the relevant assessment year, it was unsustainable in law. The contention of the assessed was upheld both by the CIT(A) as well as by the Tribunal.

Apart from the fact that there are concurrent findings of fact given by the authorities below, we find that the Tribunal noticed that the directors'' report placed on record by the assessed clearly showed that it has three divisions : a leasing division, an interior division and an equity division. Complete details of the sale and purchase of shares and the comparative figures of the earlier years had been given by the assessed to the AO. It had been indicated by the assessed that out of the total income of Rs. 3.55 crores, the income from sale of shares was Rs. 89,39,504.

In view of the above facts, particularly since all the material had been produced by the assessed before the AO, it is clear that the reopening of the completed assessment of the assessed in the present case is only as a result of change of opinion of the AO. In the circumstances, the CIT(A) and the Tribunal were right in holding that the notice issued to the assessed on 11th March, 2003 was clearly barred by limitation.

No substantial question of law arises. Dismissed.